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OSI Systems (OSIS) to report Q1 Earnings: What's in Store?

Zacks Equity Research

OSI Systems OSIS is set to report first-quarter fiscal 2020 results on Oct 24.

Notably, the first-quarter is seasonally the slowest for the company. Management expects healthcare growth to be weak in the quarter, which is anticipated to have hurt segment operating margins.

The Zacks Consensus Estimate for fiscal first-quarter revenues currently stands at $282 million, indicating growth of 6% from the year-ago quarter reported figure.

The consensus mark for earnings has remained unchanged at 85 cents over the past 30 days.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 24.5%.

Factors Likely to Influence Results

OSI Systems is benefiting from continued demand for its security solutions driven by airport security changes in Europe. Notably, in the security division, sales improved sequentially in the fourth quarter of fiscal 2019, a trend that most likely continued in fiscal first-quarter 2020 with security being a top priority for governments across the globe.

Moreover, OSI Systems’ new solutions like ORION, RTT and 920 CT have gained significant traction, which are likely to have aided top-line growth in the to-be-reported quarter.

Further, the company’s healthy backlog in its Optoelectronics divisions is expected to have contributed to the top line. Despite seasonality, record backlog in the healthcare division is expected to have contributed to top-line growth.

OSI Systems, Inc. Price and EPS Surprise

OSI Systems, Inc. Price and EPS Surprise

OSI Systems, Inc. price-eps-surprise | OSI Systems, Inc. Quote

Key Q1 Developments

During first-quarter fiscal 2020, the company won a number of contracts. In July, OSI Systems security division received an order worth roughly $8 million to provide cargo and vehicle inspection systems to U.S. government.

Additionally, the security division was awarded a U.S. state contract, valued at roughly $25 million, to provide service and maintenance support for checkpoint inspection systems installed for cargo, vehicle, and parcel inspection.

Moreover, in the months of July and August the company received orders worth approximately $24 million for patient monitoring system across hospitals in the United States.

What Our Model Says

According to the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of a positive earnings surprise.

OSI Systems has an Earnings ESP of 0.00% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

T-Mobile US TMUS has an Earnings ESP of +0.55% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

CommVault Systems CVLT has an Earnings ESP of +2.65% and a Zacks Rank #2.

Silicon Motion Technology SIMO has an Earnings ESP of +11.72% and a Zacks Rank #2.

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